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factors affecting credit score

Factors That Affect Your Credit Score

Credit cards have gained popularity in the last few years and nowadays, almost every other individual owns at least one credit card. But, having a credit card is not enough as you also need to maintain a good credit score to be able to use it effectively. A score ranging anywhere between 300 and 900 in India determines your eligibility to get further loans and credit cards. The higher the credit score, the higher the chances of you getting a loan approved. A good credit score provides numerous benefits and opens several opportunities for customers.

With a good credit score, you can avail lower interest rates, higher credit limits, easier approval for loans, and access to better insurance rates. But there are also numerous factors that affect your credit score negatively. So, in this article, let’s understand what affects your credit score, does checking your credit score lower it, and more. So, we list down the top factors affecting your credit score:

Factors that affect your credit score

Given below are the 5 factors affecting credit score:

Missed or Late Payments

One of the biggest reasons for affecting credit scores are late or missed payments. Whether you have taken an Airtel Finance loan or any other credit card, you must make payments on time if you do not want to lower your credit score. Also, the longer the payment is overdue, the more damage it does to your credit score. Hence, always keep a tab on your payment dates. And if you cannot remember the dates, you can also set up an auto payment for your bill. This way you wouldn’t have to worry about any dues.

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High Credit Utilization

Credit utilization is the amount of credit you have used in transactions against your credit limit and it usually accounts for about 30% of your overall credit score. As per experts, the credit utilization ratio should be between 20% and 30% to maintain a good credit score. It is because spending too much on a credit card is often seen as a red flag by lenders or credit bureaus. You are then seen as someone who is experiencing financial stress in life. So, the more your credit utilization ratio is, the lower your credit score can get. That’s why, ensure to make optimal use of your credit card and not go beyond what is recommended by experts.

Also Read: How to improve your Credit score – Complete guide


One of the biggest reasons that can result in lower credit scores- defaulting is the failure to repay loans as per the agreed terms and conditions. If you default on a loan, you will attract late fees and penalties. You will also get collection calls and letters from lenders. When you default on your loan or credit card, the lender can also take legal action against you. All these together indicate that you have not been keeping up with payments and policies. All of this when reported to the credit bureaus results in affecting your credit score gravely.

Short Credit History

Usually, lenders prefer to provide those customers with loans and credits who have a long history of responsible credit payments. It is because when you have a short credit history, the lender wouldn’t be able to pull up enough information about your creditworthiness. Hence, in such cases, it becomes a risky business for lenders. That’s why, it is important to have a long credit history if you wish to have a good credit score.

Having too Many Loans and Credit Accounts

Another reason that can have a negative effect on your credit score! Yes, having too many loans and credit accounts can also lower your credit score. It is because each time you apply for a loan, a credit enquiry is made. And as per experts, to maintain a good credit score, it is important for you to not have excessive credit enquiries.

As we dived deeper into the various factors impacting your credit score negatively, we are sure you will take double care to be able to enjoy the benefits that come along with a credit card.

On that note, have you checked the Airtel Axis Credit Card yet? The Airtel credit card provides interesting exclusive offers and benefits- 1% fuel surcharge waiver, up to 15% discount at partner restaurants and domestic airport lounge access, four times a year.

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FAQs on factors affecting credit score

Which are the top credit bureaus in India?

CIBIL, Experian, Equifax, and CRIF High Mark are some of the top credit bureaus in India.

How to check credit score for free?

You can visit the official websites of the above-mentioned credit bureaus to check your updated credit score for free.

Does checking your credit lower it?

No! Checking your credit score does not lower it. On the contrary, it is a healthy practice to keep a tab on your credit score.

Do student loans affect credit scores?

No, student loans do not affect credit scores. Only missed payments, unpaid loans, etc. affect your score.

Does overdraft affect credit score?

No, overdraft doesn’t affect credit scores negatively if you pay it off quickly.